On February 13, the Trump Administration released its proposal to finance improvements of the nation’s infrastructure. This proposal promotes the use of public-private partnership (“P3”) arrangements to fund these improvements by expanding exempt facility bonds (a type of tax-exempt private activity bond that can be used to finance a list of specific types of projects, … Continue Reading

The IRS recently released PLR 201726007, the first private letter ruling to interpret the revised management contract safe harbor in Rev. Proc. 2017-13. On one level, the PLR is quite straightforward – it concludes that a teaching agreement between a hospital and a school to provide clinical practice for pharmacy students does not result in … Continue Reading

Last week I attended the NABL Tax and Securities Law Institute, which always provides valuable insights from representatives of Treasury and the IRS. Vicky Tsilas, Chief, Branch 5, Financial Institutions and Products, was a panelist for Tax Hot Topics and gave a very interesting status report on the 2016-2017 Guidance Plan (first reported on here … Continue Reading

Poker has a well-established hierarchy of winning hands. If you’re holding a full house, you’ve got a right fine hand, but if you reach for the pot when the last bets are called and another player has four deuces, you will at best be the object of ridicule and at worst the subject of grievous … Continue Reading

The new Congressional session is heating up, and we’ll cover two new pieces of proposed legislation below. For the first time in several years, we can avoid giving the usual disclaimer that any new piece of legislation is “likely going nowhere.” Tax reform appears to be a real possibility for the first time in many … Continue Reading

For the third time in less than three years, the IRS has issued major guidance – Revenue Procedure 2017-13 — on the safe harbor rules for management or service contracts to avoid private business use. The new revenue procedure follows closely behind the total rewrite of the safe harbor rules that the IRS issued as … Continue Reading

Despite an increase in the federal funds rate by the Federal Open Market Committee in December, municipal bond interest rates throughout 2016 were (and still are) extremely low when compared to historic rates. As a result, the volume of municipal bond issues reached an all-time high in 2016. As discussed below, the Treasury Department released … Continue Reading

Dear Internal Revenue Service: At the Bond Attorneys’ Workshop this past October, certain of your officials indicated that you will be considering the issuance of clarifications and amendments of Revenue Procedure 2016-44 to address concerns that have been raised about particular provisions of this Revenue Procedure (which, by and large, is an excellent piece of … Continue Reading

As reported several times in this blog (here, here, and here), Rev. Proc. 2016-44 significantly expands the opportunities for management/service contracts that don’t result in private business use. One such post was Joel Swearingen’s very thoughtful piece on the future of the facts and circumstances test as applied to these contracts (here). Of course, Rev. … Continue Reading

Revenue Procedure 2016-44 is laudable because it significantly expands the scope of management contracts that can satisfy the safe harbor from private business use of facilities financed with proceeds of tax-advantaged bonds. It also makes much more feasible the use of tax-advantaged bonds in public-private partnership arrangements. Revenue Procedure 2016-44 does, however, effect one curious … Continue Reading

As we have discussed in previous posts (here), most practitioners treat a management contract for services at bond-financed property that does not fit within a safe harbor from private business use as giving rise to private business use of the bonds for tax purposes. However, the Treasury Regulations provide that whether or not a management … Continue Reading

UPDATE: The IRS has updated Section 7 (“Date of Applicability”) of Revenue Procedure 2016-44. Following the update, the prior safe harbors can be applied to any management contract entered into before (and not materially modified after) August 18, 2017 (as opposed to February 18, 2017). The original post is below. The IRS has released new … Continue Reading

We are rather fond (because you are rather fond) of discussing Rev. Proc. 97-13 and related authorities that address private business use from management contracts. Back in 2014, when the IRS amplified Rev. Proc. 97-13 in Notice 2014-67 (collectively, “97-13”), we even made a holiday present of it. Now more than ever, 97-13 is an … Continue Reading

On May 27, 2016, the National Office of the Internal Revenue Service (“IRS”) released Private Letter Ruling (“PLR”) 201622003. PLR 201622003 continues the trend of favorable PLRs issued by the IRS on the question of whether, under a facts-and-circumstances analysis, a management contract that fails to satisfy a Rev. Proc. 97-13 safe harbor from private … Continue Reading

Every year, the National Association of Bond Lawyers (“NABL”) hosts the Tax and Securities Law Institute (“TSLI”), which is an advanced conference with various workshops related to pressing issues confronting tax and securities lawyers in the public finance arena. Essentially, the annual TSLI is like Chrismukkah for tax and securities lawyers. This year’s meeting … Continue Reading

Over the past few weeks, we have written multiple posts (see here, here, and here) on the recently promulgated Final Treasury Regulations governing, among other things, allocating proceeds of tax-exempt bonds and other sources to projects that involve both qualified and private uses. As we’ve described before, the new Regulations allow issuers and 501(c)(3) borrowers … Continue Reading

There are few stereotypes more accurate than the stereotype that tax lawyers appreciate order, continuity, familiarity, and certainty. We are constantly trying to fit a particular fact pattern nicely and neatly into guidance prescribed by the IRS. This is especially true in determining whether a management contract under which a service provider operates a business … Continue Reading

An unnecessary (but hopefully interesting) introduction: Earlier this year, the great economist and mathematician, John Nash, passed away in a car accident outside his home in New Jersey. In 1994, John Nash won the Nobel Prize (formally referred to as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) for economics for … Continue Reading

It has now been almost two months since the IRS issued Notice 2014-67 and the initial euphoria of tax lawyers across the country has begun to wane. (To relive that excitement, please visit our posts of October 24, October 28 and November 5, reporting the new opportunities created by this Notice.) Today we return to … Continue Reading

Few prospects are more terrifying than either an audit by the Internal Revenue Service or anything involving prison. Put the two together, and you not only have a nightmare worthy of Stephen King, you begin to appreciate how some issuers of tax-exempt bonds have been feeling recently. As reported in the press ($), several issuers … Continue Reading

In our last post, we discussed the unsung hero of IRS Notice 2014-67 – the new, 5-year safe harbor from private business use that everyone – governmental users and 501(c)(3)s, and not just Accountable Care Organizations (ACOs) – can use immediately for management contracts covering a bond-financed facility. The much more publicized, limelight-hogging aspect of Notice 2014-67 relates … Continue Reading

(Jake Smith also co-authored this post.) Moby Dick is not a book about the whaling industry, The Godfather is not a movie about cannoli, and IRS Notice 2014-67 is not just about accountable care organizations (ACOs). You’re going to be inundated with coverage about this new Notice, and it’s all going to focus first on the new safe … Continue Reading

The Internal Revenue Service today issued Notice 2014-67, a copy of which is linked below. This Notice provides long-awaited guidance on the extent to which private business use of a tax-exempt bond-financed facility results from participation in an accountable care organization. This Notice also amplifies existing guidance under Revenue Procedure 97-13 regarding the types of … Continue Reading

Like most organizations, the IRS Tax-Exempt Bond Division (TEB) is facing a shrinking budget and a shrinking workforce. In response, the magic word at TEB these days is “efficiency.” As part of that effort, TEB has established policies that seek to maintain uniformity in the settlement amounts that arise from examinations (audits) or within the … Continue Reading